US steel companies refusing to modernize is a function of the lack of domestic competition in a pre-entrepreur era. Plus, the butcher’s bill for subsidizing cheap Chinese labor is soon going to come due.

A toxic brew:
…It was during the Great Environmental Clean-Up, why spend a fortune rebuilding an elderly plant when you can:
…The Great Diversification/Buy-Out Craze where every company was buying other companies, many in other fields* as this was the quickest way to show a profit in the next fiscal quarter. IIRC, US Steel became USX and diverted everything to the new companies letting the old steel mills wither away, which also allowed them to:
…Union Contacts and Pensions as expenses disappear when the Steel Mill goes bankrupt. Convenient, no?
(*Another Buy-Out Mania Company was the Borden Dairy. It diverted all its money into its new in Plastics subsidiary. Eventually the old Dairy plants started flunking health inspections and started closing down — too expensive to fix at that point. )

I suspect that the idea is to use tariffs as a lever to get foreign steel companies to invest in new and/or help modernize the plants here. The steel and alum companies still operating here in the US rather than thinking they are receiving manna from heaven, had instead better be getting their track shoes on or be willing to sell out to the foreign competitors who bring in the cash to buy plant. Trump doesn’t particularly care where the jobs come from as long as they come here. He’s using the only levers he has to motivate the change. Tariffs and National Security.

A book I’ve really enjoyed is Richard Preston’s “American Steel”, which tells the story of Nucor and the opening of their minimill (the first in the world with a thin slab continuous caster) in Crawfordsville, Indiana in the late 1980s.

Nucor’s corporate history is fascinating (it includes the REO Motor Car Company, which made the REO Speedwagon, a name later used by a well-known rock band), and since then they’ve grown to be one of the country’s biggest steel makers.

Preston also wrote “First Light” (about the telescopes on Palomar Mountain) which I also recommend.

That is why I find this article bouncing off the Never-Trump Echo Chamber walls . . . tiresome. Maybe you could blame the demise of Big Steel (open hearth process, strong unions) on greedy owners and greedy union bosses. But non-union electric-arc furnace Little Steel is also on the ropes.

The Nightly Business Report on Public Television (which to my mind is the only fair-and-balanced Big Media outlet left) interviewed the owner of a multi-hundred-employee mini-mill in Cincinnati, OH using the electric-arc process to make “rebar” (steel reinforcement rods that are set into concrete in just about every construction project).

As an aside, the newest and “highest” tech steel process — electric arc — is used to make the lowest and cheapest grade of steel, largely out of scrap metal. The much higher quality stuff (ductility, strength, corrosion resistance) needed for cars requires a different process.

The Fake News, by the way, is that Mr. Trump did this because he is a thin-skinned lunatic lashing out against the latest revelations regarding his Administration. The inside story (the Democracy Dies in Darkness WaPo has this, go figure) is that the president had been planning this move for quite some time to fulfil his campaign agenda, but it was kept within a very narrow circle of inner advisors because he knew Resistance to this was within the West Wing walls. Call the move lame, call the move stupid, call the move ignorant, but there are people who support this (people in Small Steel, Alt-Right blogs), and the move was not an impulsive reaction to anything.

This owner claimed having to lay off half his workforce — recently — because Turkish rebar can be landed at the Great Lakes port of Cincinnati for less money than his “raw materials”, hinting that there Mercantilism is alive and well in the era Before Trump.

That EU highly taxes gasoline is effectively a tariff because the EU is largest importer of
Crude oil. Or some EU members do produce oil so it not just foreign imports being taxed (such domestic
oil producers might be subsidized therefore making the gasoline tax, more like a tariff).
A consumption tax also acts like tariff if you are importing a lot which would be taxed.
The US is largest importer of steel in the world.
But most steel used is recycled steel, far more than new steel whether produced domestically
and/or imported.
The argument that a steel tariff will increase prices suggests the US doesn’t have competitive domestic
steel market (which is mostly recycled steel).
The think if US doesn’t have a competive steel market – that would be the problem.

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